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Middle East consortium secures loan extension for London tower project

German HSH Nordbank has extended a loan used to purchase the site for another year allowing plans for the Kohn Pedersen Fox-designed scheme in London's historic Bishopsgate area to continue.

But there is uncertainty about when the 945 foot Pinnacle, which will be one of the city's tallest towers with 63 floors and around a million square feet of office space, will be completed.

Among the investors in the consortium are Pramerica Real Estate, which has more than 18%, as well as a range of Middle Eastern investors. Arab Investments, headed by Khalid Affara, is also an equity investor and will earn a development management fee.

It is understood that the bank agreed to extend the loan following a revaluation, in which sources say the site value increased after taking into account work that had already been carried out on the site. That included the demolition of existing buildings, design, marketing and other development costs.

The consortium has not injected any further equity, although the investors are providing equity as working capital to progress the development of the tower. However, steel piling work has begun at the site.

Arab Investments hopes the scheme will be completed during the first half of 2012, but has yet to secure development finance and may be hard pressed to finish within that time scale.

Given the current turmoil in the banking sector, it is not actively seeking a development finance partner but will continue to assess the situation.

But it is committed to developing the tower and has signed a lease with the owners of the Wolseley restaurant on Piccadilly to open a restaurant on the top floors of the tower.

It signed a contract with Rex Restaurants Associates, headed by restaurateurs Chris Corbin and Jeremy King, to take 13,000 square feet for a restaurant and cocktail bar on levels 58 to 63 of the project which will be open to the general public as well as office tenants, and will have 360 degree views of London.